World Bank urges Pacific governments to replace broad fuel subsidies with targeted support for vulnerable households.
The World Bank is encouraging Pacific governments to prioritize targeted support for vulnerable households instead of relying on broad fuel subsidies as global energy prices continue to fluctuate.
Speaking during the launch of the Pacific Economic Update, World Bank economists said broad fuel subsidies can place significant pressure on government budgets while often failing to reach the people most in need.
Senior Economist Ekaterine Vashakmadze said governments should focus on “protecting people, not prices,” by directing assistance to vulnerable communities rather than subsidising fuel costs across the board.
The World Bank also noted that many Pacific island countries remain heavily dependent on imported diesel for electricity generation, leaving them exposed to global fuel price shocks and supply chain disruptions.
Lead Economist for the Pacific Ralph Van Doorn said countries with stronger social protection systems are better positioned to respond to rising living costs and economic shocks.
The report recommends that any government relief measures remain temporary, carefully targeted and fiscally sustainable to avoid placing further strain on limited national budgets.
According to the World Bank, shifting support from broad fuel subsidies to targeted welfare assistance could help Pacific nations build stronger and more sustainable economies over the long term.
